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Geojit
PVR (Buy)
CMP: ₹1,794.55
Target: ₹2,115
PVR owns and operates multiplexes across 19 States and UT’s with a total of 800 screens. Major income segments for them are Box office (Ticket revenue), Food & Beverage (F&B) and Advertisement (Ad).
Key takeaways: a) Q2FY20 revenue grew by about 37 per cent on a y-o-y basis owing to better box office and F&B collections while ATP continued to witness marginal decrease of -3 per cent (y-o-y).
SPI Cinemas got merged into PVR with effect from August 17th, 2019 by allocation of 16 lakh shares for the balance 28.3 per cent stake.
F&B spend per head grew by about 38 per cent y-o-y while Ad income rose by 16 per cent (y-o-y). We forecast F&B to witness good momentum in FY21.
SPI Cinemas posted an average performance while ATP increased (₹162 vs ₹152) due to strong traction from Hollywood movies.
PVR to continue paying tax under the regular tax rate (34.94 per cent) till the utilisation of available MAT credit.
We revise upward our FY20E & FY21E EBITDA estimates by 6 per cent & 10 per cent respectively, and increase the PAT estimates by 5 per cent & 12 per cent respectively, and upgrade the rating to BUY with a revised TP of ₹2,115 at 2.8x FY21E EV/Sales.
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